Asia: Markets edge up, pound rallies as Britain votes

[HONG KONG] The British pound rallied against the US dollar in Asian trade while stock markets were mostly up but traders stepped nervously as they await the result of Britain's in-out EU referendum on Thursday.

Attention around the globe is now fixated on the ballot, which opinion polls are saying is too close to call but bookmakers suggest will definitely see a victory for the "remain" camp.

Markets suffered a sharp sell-off last week after surveys indicated the country would leave, which many analysts warn could lead to another global rout just months after a China-fuelled sell-off that wiped trillions off valuations.

However, they have rallied over the past four days as the pro-EU campaign has recovered momentum.

"Public opinion polls keep changing," Mitsushige Akino, an executive officer at Ichiyoshi Asset Management, told Bloomberg News.

"There are going to be very few investors today who feel able to trade, so it's hard to get a clear direction in the market."

With just hours until voting begins, the pound climbed to US$1.4822 from US$1.4737 in New York and around 2016 highs. Sterling has risen almost six per cent since hitting a two-month low last Thursday.

However, Bill Fitzpatrick, portfolio manager at Manulife Asset Management, warned: "Anybody who is predicting this with a high degree of certainty is delusional.

"There's plenty of room for risk assets to move higher, but I would wait." Equity markets drifted, with Tokyo up 0.5 per cent by the break and Sydney 0.1 per cent higher while Hong Kong rose 0.2 per cent, Shanghai lost 0.1 per cent and Seoul shed 0.4 per cent.

Adding to the uncertainty were remarks from Federal Reserve boss Janet Yellen, who told lawmakers the US economy faced "considerable uncertainty" from weak domestic activity and a possible British EU exit.

Pointing to slower hiring and business investment, as well as the EU vote, Ms Yellen signalled that the Fed has become less optimistic about short-term growth and will proceed with caution on plans to raise interest rates.

Despite the shrinking chances of another US rate hike happening this year, the dollar climbed to 104.79 yen from 104.51 yen.

AFP